When luxury goods powerhouse PPR acquired a controlling stake in Swiss luxury watch manufacturer, Sowind Group, it confirmed a growing trend of consolidation within the luxury watch segment. PPR, the parent company of the popular high-end Gucci brand, already controlled 23% of Sowind before it’s recent acquisition. Now, with a 50.1% stake, it controls the prestigious Girard-Perregaux and JeanRichard brands as well.

Even more importantly, PPR now has its own manufacturer of high-end watch movements. François-Henri Pinault, the Chief Executive of PPR, has indicated that he sees enormous potential in prestigious brands like Girard-Perregaux, since they will give PPR an even stronger presence in the luxury watch market.

Samuel Friedmann, owner of The Gevril Group, speculates that this move towards consolidation in the luxury watch segment is fueled by the Swatch Group’s repeated threats to stop supplying parts and movements to rivals. It has become increasingly important for all luxury brands to have their own manufacturing capability. Friedmann’s own high-end Gevril watch brand has always had the capability to manufacture it’s own movements and this was an important consideration when he initially bought the company in 2000.

Luxury watch manufacturers have been enjoying a strong rebound in sales in recent years. Swiss watch exports are up 20% this year, largely fueled by increased demand from the growing Chinese market. This demand for luxury has created a win-win situation companies like PPR and Sowind Group who choose to consolidate. According to Mr. Friedman, Sowind Group brands will get a big boost in international markets form PPR’s worldwide distribution network and PPR will gain the capacity to manufacture 15,000 additional high-end watches annually.

Small boutique brands have never been able to reach a wide audience. By combining marketing power with manufacturing excellence, brand consolidation allows a wider audience than ever before to enjoy the pleasures of owning a luxury watch.